Anadarko Petroleum Corp., the largest domestic independent oil and gas producer, reported Friday that net income for the fourth quarter dipped 4.8% due mostly to higher operating expenses, administrative costs, depreciation and taxes. But it said that 2003 overall was a “good year” for the Houston-based company.

The producer posted fourth-quarter earnings of $294 million, or $1.17 per share, on revenues of $1.28 billion, down from $309 million, or $1.21 per share, on revenues of $1.12 billion for the same period in 2002. Anadarko’s quarterly at $1.17 were right on target with analysts surveyed by Thomson Financial Network.

For the full year, the independent producer reported net income of $1.29 billion, or $5.09 per share, on revenues of $5.12 billion, up significantly from income of $825 million, or $3.21 a share, on revenues of $3.85 billion for 2002.

Cash flow from operations in the fourth quarter was $744 million compared to $691 million for the same quarter in 2002, Anadarko said. For the full-year 2003, cash flow from operations was up 39% to $3.04 billion from $2.20 billion a year ago.

Sales of oil and natural gas volumes were flat at 49 million barrels of oil equivalent (BOE) for the fourth quarter, and fell slightly for the year to 192 million BOE from 197 million BOE in 2002, the producer said. Natural gas volumes alone for 2003 were pegged at 643 Bcf, up from 642 Bcf a year ago.

Anadarko previously had projected a 4-10% growth in oil and gas sales volumes for 2004. But it scaled back its guidance to 1-4% due to a delay in forecasted production from the company’s deepwater Marco Polo project.

It said it expects to boost its capital spending in 2004 to $2.6-$2.9 billion from $2.48 billion in 2003.

“Anadarko had a good year” in 2003, said Jim Hackett, president and CEO. “We intensified our focus on the basics of finding high-value oil and natural gas reserves and we accomplished that with excellent finding and development costs of $6.95 per BOE. Plus, we achieved record earnings and more than replaced annual production with new reserves for the 22nd consecutive year.” The producer estimated it added 377 million BOE of net reserves in 2003, putting its worldwide reserve replacement rate from all sources at nearly 200% of annual production.

Moreover, Anadarko was able to maintain capital discipline throughout 2003, he noted. “We committed to pay down $300 million in debt and actually reduced debt by over $400 million last year. At the same time, we increased reserves by eight percent at a very competitive cost.”

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